In New York, Wall Street experienced a significant downturn on Thursday as President Donald Trump’s intensifying trade war caused the S&P 500 to drop more than 10% below its recent record high. This 10% decline, referred to as a “correction” by professional investors, marked the index’s first such drop since 2023. Trump’s trade war escalation, including threats of substantial taxes on European wines and alcohol, contributed to the market’s negative performance despite some positive economic indicators. The Dow Jones Industrial Average fell 537 points (1.3%) and the Nasdaq composite dropped 2%.
The volatile market swings, occurring not just daily but even hourly, reflect the uncertainty surrounding Trump’s trade and economic policies. The president’s objectives include bringing back manufacturing jobs to the U.S. and making significant changes to the country’s workforce and other aspects. On Thursday, Trump further heightened tensions by threatening 200% tariffs on European wines in response to the European Union’s tariffs on U.S. whiskey.
The unpredictable nature of Trump’s tariff announcements has led to decreased confidence among U.S. households and businesses, raising concerns about potential declines in spending that could impact the economy. The fear of stagflation, where economic growth stalls while inflation remains high due to tariffs, poses a significant challenge for policymakers. Despite these challenges, recent reports showing milder inflation and a stable job market have provided some relief.
In the midst of these developments, certain technology stocks, particularly those in the artificial intelligence industry, faced pressure, contributing to overall market declines. Companies like Palantir Technologies and Super Micro Computer experienced significant drops, highlighting the broader concerns affecting U.S. stocks.
The market recently experienced a sell-off as critics pointed out that prices had become inflated due to the frenzy surrounding AI. Other sectors that had also been experiencing significant momentum saw their fortunes change dramatically. Tesla, led by Elon Musk, dropped 3% following a rare back-to-back gain, bringing its total decline for 2025 to over 40%. American Eagle Outfitters saw a 4.1% decrease after citing weaker demand and colder weather affecting its recent performance. The retailer predicted a decrease in revenue for the upcoming year, but also reported a stronger profit for the last quarter compared to analysts’ expectations.
On a positive note, Intel saw a 14.6% increase after appointing semiconductor industry veteran Lip-Bu Tan as its new CEO. Tan, aged 65, will be taking over the role next week following the abrupt retirement of the previous CEO, Pat Gelsinger. The S&P 500 lost 77.78 points, closing at 5,521.52, while the Dow Jones Industrial Average dropped 537.36 to 40,813.57, and the Nasdaq composite sank 345.44 to 17,303.01.
In the bond market, Treasury yields initially rose but eventually fell lower. The 10-year Treasury yield dropped to 4.27% from 4.32%, a trend that has been ongoing since January as expectations for U.S. economic growth have been revised downwards. While a recession is not widely predicted, recent reports have indicated a decline in confidence among U.S. consumers and businesses.
Stock markets in Europe and Asia also experienced declines, albeit relatively modest ones.
